Corn market price analysis: while supply exceeds demand, it continues to rise.

Near the end of the year, the corn market is about to face the season of "closing" in 2016, and the downward trend of corn market prices is beginning to emerge. here, we have to review the trend of corn prices this autumn, under the background of strong bearishness in the early market. since the northern corn harvest in October, prices have risen many times in a row, why under the dual pressure of market and policy Corn prices did not appear the expected trend of continuous decline in prices, what are the factors that affect the trend of market prices? The recent downward trend of market prices is beginning to appear, will corn prices go all the way down before the year, and will they fall below the bottom line of market prices again? Please follow the China Grain and Oil Information Network analyst Zhang Xiaofeng (author) to briefly explore the influencing factors and late trend of corn prices in the near future.

I. the main factors supporting corn prices

1. Farmers are reluctant to sell

At the time of the newly listed corn this year, the bearish mentality of the market is strong, and the price reduction mentality of grain enterprises and corn buyers is strong.

The market opening scale price is too low. The lowest point of national standard second-class grain in Northeast China is 1230 yuan / ton, and that of national standard second-class grain in North China is 1450 yuan / ton. Farmers' planting costs and profits are seriously out of balance, and their willingness to sell has plummeted. In order to seek higher income, farmers often choose to harvest corn with sticks and hoard it for sale, in order to sell natural dry corn after the moisture content is reduced, so as to increase income. Therefore, the sale time of the main corn producing provinces has been generally delayed this year, resulting in sufficient basic raw grain, while the strange situation of insufficient raw grain available for purchase and sale in the market has played a preliminary supporting role in the corn market price.

2. Freight increases

Since the implementation of the vehicle load restriction policy in September, the domestic corn circulation has been hit the hardest. According to our understanding, the cost of corn transportation has generally increased by 30-40%. At the same time, according to the load limit requirements, the amount of corn loaded by transport vehicles has decreased, and the transport pressure has increased, resulting in the situation that "one car is difficult to get" and "there is no car" in corn transportation around the country.

On the one hand, in order to ensure the purchase volume, enterprises continue to raise the purchase price, in order to increase the factory door delivery volume. On the other hand, corn buyers and sellers suppress the purchase price in order to transfer the transportation cost to the profit of raw grain, which further suppresses the willingness of farmers to sell. The rising transportation costs and the difficulty of obtaining vehicles push up the purchase price of enterprises, but it also limits the willingness of corn traders and farmers to sell, which further reduces the circulation of corn in the market and plays a continuous supporting role in the market price.

3. Weather factors

Since the new season corn came on the market, there have been continuous overcast and rainy weather in China for many times, which has seriously restricted the purchase and sale of corn market.

Farmers: affected by the overcast and rainy weather, the harvest time of farmers has been delayed, the decline of corn moisture is difficult, and the progress of corn sales is limited.

Traders: affected by the overcast and rainy weather, the purchase volume of traders is insufficient. Although the market price shows a rising trend in stages, traders wait and see to buy and sell mainly short-term wet grain, the opening rate of drying tower is low, and dry grain in the market is scarce.

Enterprises: affected by the overcast and rainy weather, the arrival volume of enterprises is in the doldrums, and the purchase price of second-class grain in individual enterprises has once risen to a high of 1900 yuan / ton.

Combined with the above reasons, the market expects that the downturn of corn prices in autumn does not continue to appear, and corn prices rise and fall frequently with the market supply.

II. Adequate basic raw grain

As can be seen from the table below, the basic raw grain in the main corn producing areas in China is sufficient, the progress of corn sales in various provinces is slow, and most of the surplus grain is still stored in the hands of farmers. At the same time, according to our understanding, in December, there is still no significant increase in farmers' willingness to sell. In Northeast China, with the arrival of winter, the temperature drops, farmers' corn storage will not become moldy, and more consideration will be given to selling after the year. The moisture content of basic surplus grain in North China is still about 20-25%, and farmers' willingness to sell is still on the low side. It is expected that the willingness to sell will increase significantly only when the moisture content of basic surplus grain falls below 18% in mid-late December.

III. Enterprises prepare goods before the end of the year

Compared with previous years, the surplus grain in the market this year is sufficient, the enterprise inventory reserve is on the low side, and the purchasing strategy is generally implemented. Near the end of the year, domestic corn grain enterprises will begin the pre-year preparation stage in order to ensure safe production during the Spring Festival. At the same time, affected by the shortage of transportation, the stock preparation time of grain enterprises will be ahead of schedule. It is expected that in December, grain enterprises will gradually increase their inventory reserves, and the market demand will increase. It will also play a supporting role in market prices.

The author's brief analysis:

As can be seen from the above three points, the domestic basic grain is sufficient, and the influence of weather factors will decline near the end of the year, and farmers' willingness to sell will increase, which is also the main reason for the recent slight decline in domestic corn prices. however, most of the surplus grain of farmers will be sold after the end of the year, and the market supply will continue to remain stable. at the same time, in December, enterprises will begin to increase their inventory reserves and market demand will increase. In addition, affected by the shortage of transport capacity, the market price will be supported. The author predicts: in December, domestic corn prices will continue to maintain a stable trend of small and medium shocks, and due to the influence of sufficient basic surplus grain, farmers' concentrated sales after the year, and the decline in enterprise demand, the trough of market prices should appear in February-April 2017. Remind farmers and traders to pay more attention to the market, and can choose to sell before the year at the right time to prevent unnecessary risks caused by sharp price cuts in the later period.

(source: China Cereals and Oil Information Network author: Zhang Xiaofeng)